Financial Forecast

If Eastern Carver County Schools taxpayers won't vote for a future referendum, what are they willing to sacrifice, pondered School Board Member Jenny Stone on Feb. 22.

Just a year after District 112 slashed the budget by $6 million, resulting in the loss of staff and some programming, a drop in enrollment due to the COVID pandemic will force another $2.65 million in cuts this summer.

The financial outlook with current levy amounts forecasts the same situation through at least 2024-25, according to the district. The unassigned fund balance would dip below 5% each year.

Even if the state of Minnesota adds 2% more funding per pupil, something the Legislature is currently discussing, budget cuts of $2.65 million for 2021-22 and $1 million for 2023-24 and 2024-25 would be needed.

"If we don't do something, it's going to result in larger class sizes and a reduction in programming," said Board Member Tim Klein.

DeeDee Kahring, Director of Finance and Operations for Eastern Carver County Schools, laid out comparables among neighboring districts for per pupil operation referendum. District 112 sits at $980. Eden Prairie ($1,601), Bloomington ($1,789), Wayzata ($1,794), Edina ($1,823), and Minnetonka ($1,936) far exceeded what is available locally.

"We continue to want to be next to our peers. If you look to the left, who do we want to compete with as a destination district. It's Wayzata, it's Minnetonka, it's Eden Prairie. So we're severely underfunded. I think we're doing phenomenal things for the level of operation," Board Chair Dr. Jeff Ross said. "We are not misusing our funds. It's the resources our neighboring districts have, and the resources we have."

The district will begin exploring the idea of a referendum, surveying stakeholders to see where they lean.

Stone said she believes voters weren't clear on what they would lose, what kind of impacts would happen if the 2019 referendum failed.

"The impact is in the classroom. The levy dollars are going directly to students," Ross said.

Klein said presenting numbers in the survey isn't enough. It's showing residents what each dollar amount does. Does it result in the same or even more programming. Does the amount just keep the lights on?

"I'm super concerned about the tax impact. But, it's a no-brainer. We're going to have to go out and do something with our operating," said Board Vice Chair Lisa Anderson. "Getting that survey will help guide us. What is the community's willingness to step up?"

In 2019, two of three referendum questions failed by 193 and 495 votes, respectively. The first question asked for an operating levy increase of $550 per student, or approximately $5.6 million per year for 10 years, adjusted for inflation.

The second question was a 20-year bond request for $111.7 million to build a new elementary school, repair buildings and acquire a larger bus garage.

FACILITIES TASK FORCE

Earlier this month, Kahring presented the findings of an extensive facilities task force at a board workshop. On Feb. 23, she shared how the projects may be funded.

The task force concluded on these objectives:

  • Carver Elementary addition, $8 million. Project would allow for 150 more kids in the building. Kahring said without an addition, or a new building in the Big Woods development, "we won't be able to keep up with the enrollment of the school." She noted multiple new residential developments being built right by the school. Kahring said by using a lease levy, in which board authority would be needed, the tax impact would be low. Construction could be complete by 2023.
  • New bus garage, $12 million. The current space, in downtown Chaska, is inadequate. Depending on where land is purchased and a garage is built — a township location would be cheapest — the cost could be $10-12 million. Kahring laid out a plan, using $500,000 from a reserved fund, a transfer of $2 million from a sale of former district property in Victoria, using funds from a potential sale of current garage space (appraised $3 million) as well as earmarking a recent $3 million donation to the district. The current space was purchased through the general fund. Kahring suggested using Certificates of Participation for the project.

Additionally, the district would like to fulfill between $10-12 million of deferred maintenance to school buildings. Much of that money would go to Chanhassen Elementary and La Academia.

District 112 will see a significant reduction in debt in coming years with 20-year bonds coming off in the books in 2025 for Victoria Elementary and 2028 for Chanhassen High School. Remaining $5 million payments are for Carver Elementary, the Eastern Carver County Athletic Center, and additions at Clover Ridge and Victoria buildings.

Kahring cautioned against any kind of bond referendum for a new building, such as an elementary targeted for western Chaska in the Big Woods development.

"The school district will have to go out for a bond referendum to reflect that at some time when we see the growth of enrollment we saw at the pace from before (the pandemic)," Kahring said.

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